Study Casts Light On Which BRICS Are Richest, Where The HNW Individuals Reside

Tom Burroughes

10 December 2012

Wealth managers prospecting for clients in the BRICS – Brazil, Russia, India, China and South Africa – will find where the hotspots are due to a new report issued by research house WealthInsight. Among the key facts is that China made up 40 per cent of the top BRICS’ cities for multi-millionaires at the end of 2011.

There are nine Brazilian cities on the list, five from India, two from Russia and two from South Africa, the report, which covers 30 cities in total, said.

“Beijing was the largest BRICS’ city for multi-millionaires , followed by São Paulo , Shanghai , Moscow and Mumbai ,” Andrew Amoils, analyst, said.

At the end of last year, there were 1.9 million high net worth individuals in the BRICS countries, with combined wealth of $7.5 trillion, equal to 11.3 per cent of HNW individuals by number and accounting for 11.4 per cent of worldwide HNW wealth , the report said.

The total number of HNW individuals in these countries increased by 30 per cent over the review period from 1.5 million HNW individuals in 2007 to 1.9 million in 2011.

The total number of such individuals in the BRICS is expected to rise by 76 per cent, to reach 3.4 million in 2016. HNW individual wealth will see a slightly larger percentage increase, growing by 83 per cent to reach $13.7 trillion in 2016.

Countries

At the end of 2011, two-thirds 66 per cent of wealthy individuals in these countries were based in China . India accounted for 251,000 such persons, followed by Brazil with 194,000, Russia with 160,000 and South Africa with 45,000.

The number of HNW persons in China increased by 40 per cent over the review period, whilst volumes increased by 32 per cent in India, 31 per cent in Brazil and 18 per cent in South Africa. Russia was the only country in the group to experience a drop in numbers, down 18 per cent.

Over the forecast period, India is expected to experience the strongest growth in volumes , followed by China with 83 per cent growth, South Africa with 41 per cent growth, Brazil with 40 per cent growth and Russia with 36 per cent growth.

Regions

Beijing had the largest collection of HNW persons followed by São Paulo , Shanghai , Moscow and Mumbai .

Other findings

Banco Itaú controls a quarter of the Brazilian private banking market, followed by Bank of America with 8 per cent and UBS with 7 per cent.

More than 35 per cent of Russian HNW individual wealth was held offshore at the end of 2011.

The current wealth management leaders in Russia are UBS and Credit Suisse, with local AuM of $15 billion and $10 billion respectively. Other prominent foreign players include Pictet and Goldman Sachs. The leading locally based Russian private banks are UFG Invest, Troika Dialog and Third Rome.

Over 20 per cent of South African HNW wealth is held offshore. Most of this wealth is held in the UK, Switzerland and the Channel Islands. Absa and Investec are the two largest private banks in South Africa by local AuM.

The wealth management and private banking sector in China is still in its nascent stage, the report said. It estimates that 9 per cent of Chinese HNW individuals use private banks and wealth managers. This figure is expected to rise to over 14 per cent by 2016, the report added.

For the purposes of the report, the phrase “review period” relates to the years 2007–2011 and the “forecast period” relates to the years 2011–2016.